U.S. Markets closed

PubMatic CEO Rajeev Goel on Growth Drivers in Digital Advertising

  • Oops!
    Something went wrong.
    Please try again later.
·7 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

PubMatic CEO Rajeev Goel

By Jarrett Banks

To succeed in digital advertising, a company must excel in processing speed and the quantity of data it can process efficiently. PubMatic, Inc. (Nasdaq: PUBM) is able to generate better outcomes by owning its own infrastructure, which allows it to be more transparent with its customers and innovate at a more rapid pace.

Exec Edge sat down with CEO Rajeev Goel to find out more about the company and how digital advertising is transforming the industry.

You have an omni channel platform. What areas are seeing the most growth right now?

Our omnichannel platform is particularly well suited for the current environment as advertisers can reach consumers wherever they may be consuming media – at home, at the office, or out and about – as each geographic market we participate in evolves on its own re-opening path. We have prioritized solutions that drive omnichannel monetization for publisher partners, including Prebid-based header bidding solutions OpenWrap SDK (for mobile app inventory) and OpenWrap OTT (for OTT and CTV inventory), as well as Identity Hub, which allows publishers to work with leading first-party ID solutions to maximize revenue and adapt quickly to changes in the market. Programmatic OTT and Connected TV, as well as mobile, remain key drivers of our growth: revenue from these fast-growing advertising formats (mobile and omnichannel video, which includes OTT/CTV), grew 83 percent year-over-year and represented 63 percent of our total revenue in Q1 2021.

This is an area that will continue to grow. eMarketer estimates that programmatic CTV, will be almost $7 billion dollars in the US in 2021, which equates to year over year growth of more than 50 percent. This impressive growth rate suggests that the industry is early in the transition from linear TV to over the top streaming Connected TV devices. Our latest earnings reflect this growth and our ability to service this market: revenue from OTT/CTV grew 55 percent sequentially from Q4 2020, and we monetized OTT/CTV inventory from over 80 publishers.

Tell us about how the company is positioned to benefit from the growth in smart TVs.

We have continued to invest in supporting this market for the last several years, and have created a suite of products specifically designed for this market. We recently announced our fraud-free CTV program for ad buyers, which extends our existing, rigorous inventory review process to in-demand CTV inventory. We also launched a programmatic offering that enables connected TV (CTV) and over-the-top (OTT) ads to run seamlessly and improve the revenue that media owners get from their streaming video ads.

These innovative technologies support this growing market and PubMatic’s capture of market share. As of our latest earnings report, we saw strong sequential growth for our OTT/CTV business of 55 percent from Q4 2020 to Q1 2021, with CTV inventory monetized from over 80 publishers.

Talk about your publisher/agency relationships.

PubMatic continues to invest in our relationships with both publishers and agencies. We recently announced a partnership with Samba TV to integrate their extensive first-party Connected TV data and deliver TV audience targeting to programmatic advertising buyers. On the agency side, we announced our selection by GroupM as a global preferred SSP, and launched or expanded supply path optimization (SPO) agreements with Havas and Publicis Media Asia Pacific.

These relationships are reflective of the business’ continued growth: in the first quarter, we grew our OTT/CTV business 55 percent over Q4 2020, and monetized CTV inventory from over 80 publishers, including new publisher additions like Meredith Local Group and LocalNow. More than 200 publishers in over 30 markets worldwide use our OpenWrap technology to increase yield and boost omnichannel monetization of video and display inventory across platforms, including OTT/CTV, mobile app, and web. Our customers include The Boston Globe, Complex Networks, Dictionary, Dwango, Italiaonline, New England Sports Network (NESN), 9GAG, and RP Digital. Additionally, our Identity Hub solution scaled to over 175 publishers, allowing them to seamlessly integrate with and optimize the leading identity providers globally.

What can you tell us about SWAN? How should publishers and advertisers be thinking about addressability and moving past the third-party cookie?

We believe the disruption caused by rapid changes to audience addressability and the pending deprecation of the cookie and other anonymous identifiers will benefit PubMatic as the value proposition for the Open Internet grows relative to the walled gardens in the eyes of advertisers.

We have invested heavily behind this opportunity for several years and continue to do so, which is why today, the majority of revenue on our platform now has alternative identifiers to the third party cookie and Apple IDFA. We have achieved this milestone through long term investment in a portfolio of solutions that together meet the growing and evolving needs for audience addressability. For example our Identity Hub solution, scaled to well over 175 publishers including Cox Automotive in the US and Time Out in the UK, allows publishers to seamlessly integrate, optimize, and manage multiple leading identity providers globally. Our Audience Encore solution allows buyers to access high quality publisher first-party data to execute effective and privacy-safe advertising campaigns at scale. We have a variety of data partners in the retail, CPG, healthcare, automotive, and other industries.

Having alternative identifiers available at scale, in many cases identifiers that provide greater addressability than anonymous identifiers like the third-party cookie, provides an environment to drive even greater utilization of our infrastructure. We expect these identifiers to grow the share of spend in the Open Internet, and on our platform in particular.

How are you helping Internet content creators through your specialized cloud platform?

We believe that an infrastructure driven approach to digital advertising creates outsized value. Underpinning our continued growth is our owned and operated cloud infrastructure built specifically for digital advertising. This infrastructure-driven approach serves as a flywheel that allows us to grow top line revenue, leverage our largely fixed cost structure to drive profitability, and re-invest in innovation for our customers to again drive top line revenue.

Being the best at efficiently collecting and analyzing data requires controlling all layers of the infrastructure stack – network, hardware, and software. Our approach provides us with several key benefits and a significant competitive moat compared to our peers. First, we are able to generate superior outcomes for our customers, specifically increased revenue for our publishers and higher advertising ROI for media buyers. Second, controlling all layers of the tech stack allows us to rapidly innovate and future proof our business, as well as that of our customers. We deploy new capabilities, features, and algorithm updates on a daily basis across our global infrastructure.

Lastly, by owning all layers of the infrastructure stack, we are well positioned to continuously drive down costs by becoming more efficient, a benefit to our customers and to us. Our efficiency advantage allows us to be transparent with buyers, which in turn causes them to spend more on our platform. And as they spend more on our platform, our publishers benefit with increased revenue.

Why is infrastructure important to giving advertisers and publishers the ability to scale and grow?

At PubMatic, we have invested heavily in our infrastructure over the past 14 years and believe our systems and technology provide our customers with a significant competitive advantage. We power our cloud platform by proprietary software deployed on PubMatic-owned and operated hardware close to our customers around the world. By controlling all layers of our infrastructure stack, including network, hardware, and software, we can operate more efficiently and drive increased revenue for our publishers and higher ROI for our buyers.

Our platform, and an enormous number of transactions on behalf of our advertiser and publisher customers, rely on robust systems and services. We provide a specialized cloud infrastructure platform that enables real-time programmatic advertising transactions across continents, ad formats, and devices, enabling a high degree of cost efficiency and rapid innovation to deliver superior results to our customers. We process near a trillion advertiser bids every day and in aggregate, process 134 billion ad impressions daily, which generates over 1.65 petabytes of data per day.

Exec Edge Contact:

Jarrett Banks, Editor-at-Large
jb@capmarketsmedia.com
Twitter: @Exec_Edge